Hedge Funds and retail investors

Just before the correction in major indices it seems a large number of hedge funds charged into stocks. Also, retail investors also (E Trade and TDA) accounted for 1/3 of all stock purchase volume. The week we saw the start of the fall was also a great week for earnings (even Apple) and also macro data ISM, ADP and NFP all showing good improvements. That is why a lot were caught out.

It just shows - it doesn’t matter how good your system is and how sharp you are if you do not manage risk in a certain way you will never lead the pack. My system gave me a sell - it was an initially a weak signal and so how many had I seen over the years to then catapult upwards, I just sat on my hands and didn’t trade indices.

I cannot stress the importance of using stops when trading in these markets and especially when trading other people’s hard earnt cash!


I always say, futures trading number one rule on first day of trading: Always use a hard stoploss! I learned this the hard (or expensive) way. :slight_smile: